Despite this problem of data collection, Sterman says that it’s clear that St. Louis, as a region, has spent a lot of money in the name of economic development with very little to show for it. The report did not look at various tax abatement programs. Adding those in could well double the $2.5 billion figure, he said.
According to the report, 80 percent of this investment has been focused on projects that include retail developments. Despite this massive investment of economic development funds, a mere 5,400 net new retail jobs have been created. Meanwhile, since 1990 the region generated 200,000 jobs in the service sector while actually losing 35,000 goods- producing jobs. Overall, jobs grew at an anemic annual rate of just 0.8 percent over that period.
Sterman says the picture is probably even bleaker now, as the council’s data collection ended before the current downturn in the economy.
The report also looked at retail sales and retail sales per capita of population - the idea being, Sterman says, that if the region has invested $2.5 billion in retail development, there should be a corresponding increase in retail jobs and retail sales. No such correlation was found, however, leading to the conclusion that what has, in fact, been going on is that retail sales and sales tax dollars have simply been moving from one place to another.
“The bottom line,” said Sterman, “is if you have to spend a couple billion dollars on incentives, what would you spend it on? We’re not complaining about spending the money. The question is, what do you spend it on? Certainly restoring communities, providing good paying jobs, all of those things are good - but obviously, paying for a Wal-Mart to be built that probably would have been built anyway is probably not a good investment for the public.”
The report was hotly criticized by T.R. Carr, mayor of the city of Hazelwood, Mo. and chairman of the Department of Public Administration and Policy Analysis at Southern Illinois University Edwardsville.
“I think the report is incomplete, inaccurate and really does not accurately assess the situation with municipal incentives,” Carr said.
He points to an example in Hazelwood: Park 370. Carr says that when Interstate 370 was built, connecting I-270 and I-70, the Missouri Department of Transportation refused to put an interchange at Taussig Road. Carr says it was then necessary to create a tax increment financing district in order to finance the construction of the interchange and to open the area up for development. It was two to four years later, he says, when developers came to the city with the idea of building the St. Louis Mills Mall.
“Not one thin dime of the TIF dollars was
used by the mall itself,” Carr said. “That’s important because we took a lot of criticism saying that we were subsidizing retail development, and nothing could be further from the truth. We have 2,000 retail jobs in Park 370 and we have about 1,000 non-retail jobs in the surrounding industrial area. As the industrial area is built out, we anticipate having about 2,000-plus 
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individuals working in that area.”
Carr also says that the action by the city to create the Park 370 TIF district mitigated urban sprawl because the shopping mall would have ended up west in St. Charles County, where MoDOT had built several interchanges on I-370.
“We believe that East-West Gateway and MODOT have a bias in terms of funding for developments in the outlying areas as opposed to St. Louis County and St. Louis City, so the only choice we have to fight urban sprawl is to do this,” said Carr. “They fail to understand that we need some kind of a mechanism to develop and continually redevelop St. Louis County. And in the absence of redevelopment tools, sprawl will be the result. We're doing everything we can to combat urban sprawl. People want to live where there are amenities, and we have done that in Hazelwood. Otherwise, everything would have gone farther and farther west,” he added.
John Herzog, Madison County economic development coordinator, doesn’t quarrel with the report but says that Illinois communities have done a much better job of using tools like TIF for their intended purposes. He points to projects like the redevelopment of the Owens-Illinois glass plant in Alton, the support of U.S. Steel’s Granite City Works and the reopening of American Steel Foundries in Granite City as good examples of what TIF can do.
“Generally I think when TIF has been used for retail development on the Illinois side, it’s been used in older, distressed areas where there are good public policy reasons for doing it,” Herzog said. “Where Illinois really uses it well is on the industrial deal: the Alton Business Center, Granite City Steel, the American Steel plant. Those either created or retained jobs. It’s the basic economic development concept that you concentrate on the jobs that bring in wealth and bring in new dollars to the community, and let retail take care of itself.”
The report by the council is termed a preliminary report; Carr says he has sent a letter to the council outlining his complaints and asking them to go back and get it right, but he’s not optimistic that that will happen.
“The East-West Gateway report was flawed from its beginning,” Carr said. “I think from it’s inception it was a flawed, incomplete analysis. The only thing I would agree about the report is that it's preliminary and incomplete, because it is preliminary and it is incomplete and it is flawed.”
Sterman says that he’s familiar with Carr’s criticisms and he agrees that there are instances where these economic development incentives have been used well and effectively. But he says the focus of economic development should be in growing the economy and creating jobs - and the St. Louis area has not done that.
“This region, no matter how you look at it, has not performed well economically,” Sterman said. “It hasn’t for 20 years, and to suggest that we can continue doing the same things over and over again and expect a different result is foolish.”
vice president/coo: Alan Ortbals
email: aortbals@ibjonline.com |
